On January 1, 2010, Rong Company Signed a Contract to Have

question 22

Multiple Choice

On January 1, 2010, Rong Company signed a contract to have Rozy Associates construct a manufacturing facility at a cost of $14, 000, 000.It was estimated that it would take three years to complete the project.Also on January 1, 2010, to finance the construction cost, Rong borrowed $14, 000, 000 payable in seven annual installments of $2, 000, 000 plus interest at the rate of 9%.During 2010, Rong made progress payments totaling $5, 000, 000 under the contract, and the average amount of accumulated expenditures was $3, 000, 000 for the year.The excess borrowed funds were invested in short-term securities, from which Rong realized investment income of $330, 000.What amount should Rong report as capitalized interest at December 31, 2010?

• A)$ 0
• B)$ 270, 000
• C)$ 510, 000
• D)$1, 260, 000

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Definitions:

Complex Needs

Situations or conditions that require multiple forms of support or intervention due to their intricate or compounded nature.

Hawthorne Studies

A series of studies conducted in the early 20th century focusing on how work conditions affect employee productivity and morale.

Informal Organization

The ever-changing set of relationships and interactions that are not formally put together; they form naturally in the workplace.

Elton Mayo

An Australian psychologist and organizational theorist best known for his research in the Hawthorne Studies, which examined the effects of social relations, motivation, and employee productivity.